Farm subsidies significantly influence global trade by affecting the competitiveness of agricultural products. When a government provides subsidies to its farmers, it lowers their production costs. This enables those farmers to sell their products at lower prices than those of unsubsidised producers, both domestically and internationally.

As a result, countries with high subsidies can dominate the global market, making it difficult for farmers in other countries to compete. This often leads to market distortions, where subsidized products flood international markets, depressing prices worldwide. Developing countries, in particular, suffer because their farmers, lacking similar financial support, cannot compete with the low prices of subsidized goods.

Additionally, farm subsidies can lead to trade disputes and tensions between countries. Nations that feel disadvantaged by the subsidies of others may impose tariffs or other trade barriers in response, potentially leading to trade wars.

Overall, while subsidies aim to support domestic agriculture, they can create significant imbalances and tensions in global trade, impacting economies and livelihoods worldwide.